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India hits new private equity record in 2006

Private equity firms invested a record $7.46 billion in India during 2006, more than triple the amount invested in 2005, according to Venture Intelligence, an Indian industry research service.

There were 299 private equity deals in India worth a record $7.46 billion over 2006, well above the 148 deals worth $2.2 billion in 2005, according to the latest findings by Venture Intelligence India, a data provider.

Arun Nataranjan, founder of Venture Intelligence, attributed the jump to “mega-deal phenomenon” – marked by KKR-Flextronics Software buyout – and a couple of large deals involving telecommunication services companies.

In the last quarter of 2006, Provident Equity Partners alongside a number of other firms including Sequoia Capital, ChrysCapital, Citigroup and Macquarie Bank invested a combined $966 million in the pre-IPO share placement by India’s Idea Cellular, Nataranjan said.

Over 2006, there were 26 deals involving investments of more than $50 million, a sharp increase from nine such deals over 2005, Venture Intelligence research showed.

Raja Kumar, chief executive officer of UTI Venture Funds in Bangalore said: “I won’t be surprised if the investment amount in 2007 touches $10 billion. A handful of firms canvassed in recent weeks have revealed plans to increase their focus in India.

Information Technology and IT-enabled services, which accounted for $1.47 billion over 87 deals, continued to be private equity investors’ favourite sector. Manufacturing industry ranked second with 55 investments amounting to $962 million, according to Venture Intelligence.

Late stage investments accounted for 36 percent of all deals, while private investments in listed companies accounted for 22 percent of the deals. Early stage investments accounted for about 20 percent of all the private equity and venture deals completed in 2006.